Health insurance cover levels fall nearly 10% following ‘stealth tax raid’
The number of people covered by personal health insurance has fallen by nearly 10% amid a “stealth tax raid” which has put an upward pressure on premiums, according to insurers.
The Association of British Insurers (ABI) said that, over a four-year period between 2015 and 2019, the number of people covered by personal health insurance has dropped to 1.2 million, marking a fall of nearly 10%.
This is the same period during which insurance premium tax (IPT) was doubled, from 6% to 12%.
The number of people covered by corporate health insurance also fell to 3.5 million, a fall of more than 5% in four years, which the ABI said further highlights the damage caused by successive increases in IPT.
The total number of people covered by health insurance fell to 4.7 million, nearly 300,000 fewer people than four years ago.
IPT is a tax on general insurance premiums which eats into insurance providers’ costs and may then be passed on to consumers in the form of higher premiums.
The ABI said that, as well as an increase in IPT, there have been significant increases in medical costs driven by the use of increasingly sophisticated technologies and treatments. These costs are expected to carry on rising.
Roshani Hill, head of protection and health at the ABI, said: “Private health insurers pay out on average £7 million a day, helping people get the treatment they need where and when they want it.
“As well as providing a vital service to millions of people, health insurance also provides much-needed relief to an overburdened NHS. This makes increasing insurance premium tax and driving people away from health insurance a false economy.
“Insurance premium tax has doubled since 2015, giving the UK one of the highest rates in Europe. It is time to give responsible people a break and cut the tax on insurance.”